I therefore have two scenarios for ES, which become the same scenario next week, as we form what I am expecting to be the right shoulder of a bottoming IHS. Here's the first scenario where the lower trendline of the rising wedge breaks today, and ES falls to my next target in the 1050 - 1060 area:
On my second scenario, ES bounces back towards the top trendline of the rising wedge, and turns back either at the recent high, or the June high, both of which are possible necklines for the IHS that I think is forming. It then turns back down towards the 1050 - 1060 ES area to make the right shoulder of that IHS.
Resistance at 1104.5 ES could hold however, giving only a partial rise. I'm looking for an upswing target of 1.575 on GBPUSD and (less confidently) 1.314 on EURUSD, If they are hit before or as we hit 1104.5, then the chances are that we will go no higher:
For today's direction, the key is the strong support area at 1084.5 ES. If it breaks and we close an hour below it, then we are going with scenario 1 IMO. If it holds then we are going with scenario 2. I'm leaning towards scenario 2 slightly because EURUSD and GBPUSD have not yet made my upside targets for them, but it could easily go the other way.
I've mentioned before that I think we have bottomed for the summer, and the reason I think so is because of breaks down in USD and long treasuries, among other reasons, but the target of the large rising wedge is obviously for a full retracement of the rise since the low, though I'm not expecting to see that hit.
Instead I am assuming that the rising wedge will evolve into a rising channel, as they often do and from that I get my target of 1050 - 1060 ES, though the target would be 1045 ES if it was hit today. If that theoretical trendline breaks, and if the mid-July low is broken, then we will most likely see a return to and possibly beyond the lows, despite the many indicators suggesting that won't happen.
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